Sanity check: Is the U.S. losing its role as the world leader in information technology?

Issue: U.S. as IT leader

The United States is the birthplace of both the personal computer and the Internet. It has written the rules for using business technology to deliver staggering increases in worker productivity. It has given the world major innovations in the microprocessors that power computing and electronics devices of all sizes and functions.

The U.S. has quite simply served as the undisputed leader and catalyst of the global IT industry for the past 40 years. Yet the landscape has changed rapidly over the past decade, and especially in the past five years, as the U.S. is now facing challenges across the board from nimble innovators in Europe and Asia.

In the past several months, many journalists and commentators in the U.S. have made bold assertions and dire predictions about America's decline as a force in technology. Below is a list of some of the more prominent (and most dire) reports, including links and some quotes that provide a brief synopsis of each one.

"The United States has fallen to seventh place among 122 economies in its network readiness, or ability to leverage the opportunities of IT, according to a report ... by the World Economic Forum [sponsored by Cisco]. Denmark supplanted the U.S. at the top of the list thanks in part to its regulatory environment, government leadership and vision in leveraging IT for growth."

"I'm surprised we were in the No. 1 spot in 2006," said Safa Rashtchy, senior research analyst with Piper Jaffray. "The fact is, as much as we don't like to admit it, we are not the leading edge of Internet and wireless technologies. Part of the reason has to do with our economy and lack of government support; it's also a byproduct of the extremely competitive market."

"The world's emerging economies are narrowing the technology deployment gap with the U.S. and other developed countries, says a new global study conducted by Info-Tech Research Group and KnowledgeStorm. While the U.S. is still the global leader in the implementation of technology-enabled business solutions, adoption of these systems by enterprises within regions such as India, Africa, Asia and Latin America is growing due to confidence in the ability of technology to transform business...

"Emerging economies can play catch-up quickly because of the ability of these countries to adopt the latest versions of technology that's already been tried, tested and improved in established economies. From an Information Technology (IT) solutions perspective, India has already joined the ranks of established economies because of the willingness of its IT managers to embrace sophisticated solutions."

"The U.S. is lagging behind other industrialized nations in the availability and use of high-speed broadband connections, according to a report [by] Washington-based Communications Workers of America... According to the report, the U.S. is 16th in the world in deployment and availability of high-speed networks...

"The U.S. [also] lags behind other nations when it comes to cost of broadband access... Speeds of 50Mbit/sec., which is not available to residential consumers in [the U.S.], is available to Japanese consumers for roughly US$30 per month. U.S. consumers typically pay $20 for about 1Mbit/sec. service and $30 to $40 for about 4Mbit/sec. service."

"In the past few years, other nations have caught up with, and in many ways surpassed, the United States in reaching important milestones, and the future is probably going to get worse... A decade or so ago, roughly 35 percent of the investments in leading-edge chip technologies were made in the United States. In the last five years, only about 10 percent to 12 percent of those investments landed stateside... Many of these overseas investments are made by U.S. corporations."

"In the global battle for infotech supremacy, is America surrendering? Recent evidence suggests that the U.S. is at least thinking about giving up. I'm talking not just about America's ability to produce the fastest chip or most popular software but also about something potentially even more serious: the ability of all businesses to be world-class users of information technology...

"The more worrisome problem is what's happening with the kids. Moving herdlike, as usual, they've decided that IT is excruciatingly uncool. Of course it was the coolest thing on the planet just seven years ago, when interest in computer science as an undergraduate major hit a 20-year high. But then a lot of things happened. The dot-com boom went bust at just the time companies stopped hiring staff to fix Y2K problems. More important, the pop culture image of infotech workers flipped from dot-com billionaires in Gulfstreams to Dilbertesque drones writing code in cubicles and Third World masses working for pennies an hour."

Sanity check

After reading those articles, it's easy to get pessimistic about the current state of IT in the U.S., but I would caution against concluding that the U.S. is doomed to tech mediocrity for the following four reasons:

1.) The U.S. is at a tactical disadvantage at the moment — Since many of today's latest technologies (in virtually every field) are simpler to use and implement, have more features, and are much cheaper than their predecessors, international upstarts have a big advantage right out of the gates when they establish their internal IT infrastructure. These upstarts get to build their infrastructure from scratch, unlike many of their U.S. rivals, which don't have the luxury of a clean slate but have to face the difficulties of data migration and staff retraining when upgrading or migrating to the latest technologies. That means new rivals have the advantages of new technologies. However, this advantage will even out and disappear over time as the upstarts become entrenched in their current systems. The irony is that the technology itself — much of it created by U.S. companies and often including major innovations in recent years — can be one of the major factors that allows startups to quickly make up ground on incumbents.
2.) This was bound to happen as IT helped accelerate globalization — One of the most significant changes that has come with the rapid advancement of computers and networks has been the world-changing developments in communications technology. Just think of it ... you can now make a good-quality Skype video call from the U.S. to China and be connected for over an hour, and it's free! These changes have connected people more quickly and cohesively than ever before, have spread new ideas and developments across the planet, and have driven the powerful forces of economic globalization. With all of these forces at work, it was only a matter of time before more people from new parts of the globe got involved in the technology sector and helped drive it forward in new directions.
3.) Silicon Valley is still the epicenter of the technology world — Clearly, not all of the best ideas in technology are hatched from that overpriced stretch of real estate from San Jose to San Francisco, California. Companies such as Vidoop (in Tulsa, Oklahoma) and Zoho (with its product teams in India) have proven that. Nevertheless, there are still more new and innovative tech ideas concentrated in Silicon Valley than anywhere else on earth. And with Google, Intel, Yahoo, Apple, and so many other tech giants anchored in Silicon Valley, nothing is going to change that fact anytime soon. More of the greatest innovations in technology are coming out of the U.S. than anywhere else.
4.) The sleeping giant hasn't woken up yet — The U.S. can never go back to having the kind of unparalleled tech leadership position that it enjoyed a decade ago. That genie will never go back in the bottle. There are simply too many players involved now and too much competition. However, the sleeping giant does need to wake up and acknowledge that it is under attack from various competitors. Many of the problems that the IT industry faces in the U.S are due to complacency, and that's fixable. The U.S. tech industry must shake off that complacency and work toward creating a better regulatory atmosphere for tech companies to flourish here (with help from the U.S. government, of course), a better approach to reigniting interest in tech education, and a better sense of the areas where the competition is winning and where there are still opportunities for U.S. companies and workers to take the lead in today's multinational IT industry.

Do you think the U.S. has lost its role as the world leader of IT? Why or why not? If you do think so, what do you think are some of causes? Where do you think the U.S. still has opportunities to lead? Join the discussion.